THEY KNOW WHAT I'LL SIGN, LET THEM WRITE IT:

President Holds Press Conference (George W. Bush, Room 450, Dwight DC Eisenhower Executive Office Building, 12/20/04)

Q Thank you, Mr. President. You've made Social Security reform the top of your domestic agenda for a second term. You've been talking extensively about the benefits of private accounts. But by most estimations, private accounts may leave something for young workers at the end, but wouldn't do much to solve the overall financial problem with Social Security.

And I'm just wondering, as you're promoting these private accounts, why aren't you talking about some of the tough measures that may have to be taken to preserve the solvency of Social Security, such as increasing the retirement age, cutting benefits, or means testing for Social Security?

THE PRESIDENT: Yes, I appreciate that question. First of all, let me put the Social Security issue in proper perspective. It is a very important issue -- but it's not the only issue, very important issue we'll be dealing with. I expect the Congress to bring forth meaningful tort reform. I want the legal system reformed in such a way that we are competitive in the world. I'll be talking about the budget, of course; there is a lot of concern in the financial markets about our deficits, short-term and long-term deficits. The long-term deficit, of course, is caused by some of the entitlement programs, the unfunded liabilities inherent in our entitlement programs. I will continue to push on an education agenda. There's no doubt in my mind that the No Child Left Behind Act is meaningful, real, reform that is having real results. And I look forward to strengthening No Child Left Behind. Immigration reform is a very important agenda item, as we move forward.

But Social Security, as well, is a big item. And I campaigned on it, as you're painfully aware, since you had to suffer through many of my speeches. I didn't duck the issue like others have done have in the past. I said this is a vital issue and we need to work together to solve it. Now, the temptation is going to be, by well-meaning people such as yourself, John, and others here, as we run up to the issue to get me to negotiate with myself in public; to say, you know, what's this mean, Mr. President, what's that mean. I'm not going to do that. I don't get to write the law. I will propose a solution at the appropriate time, but the law will be written in the halls of Congress. And I will negotiate with them, with the members of Congress, and they will want me to start playing my hand: Will you accept this? Will you not accept that? Why don't you do this hard thing? Why don't you do that? I fully recognize this is going to be a decision that requires difficult choices, John. Inherent in your question is, do I recognize that? You bet I do. Otherwise, it would have been.

And so I am -- I just want to try to condition you. I'm not doing a very good job, because the other day in the Oval when the press pool came in I was asked about this -- a series of question on -- a question on Social Security with these different aspects to it. And I said, I'm not going to negotiate with myself. And I will negotiate at the appropriate time with the law writers. And so thank you for trying. The principles I laid out in the course of the campaign, and the principles we laid out at the recent economic summit are still the principles I believe in. And that is nothing will change for those near our Social Security; payroll -- I believe you were the one who asked me about the payroll tax, if I'm not mistaken -- will not go up.

And I know there's a big definition about what that means. Well, again, I will repeat. Don't bother to ask me. Or you can ask me. I shouldn't -- I can't tell you what to ask. It's not the holiday spirit. (Laughter.) It is all part of trying to get me to set the parameters apart from the Congress, which is not a good way to get substantive reform done.

As to personal accounts, it is, in my judgment, essential to make the system viable in the out years to allow younger workers to earn an interest rate more significant than that which is being earned with their own money now inside the Social Security trust. But the first step in this process is for members of Congress to realize we have a problem.

And so for a while, I think it's important for me to continue to work with members of both parties to explain the problem. Because if people don't think there's a problem, we can talk about this issue until we're blue in the face, and nothing will get done. And there is a problem. There's a problem because now it requires three workers per retiree to keep Social Security promises. In 2040, it will require two workers per employee to meet the promises. And when the system was set up and designed, I think it was, like, 15 or more workers per employee. That is a problem. The system goes into the red. In other words, there's more money going out than coming in, in 2018. There is an unfunded liability of $11 trillion. And I understand how this works. Many times, legislative bodies will not react unless the crisis is apparent, crisis is upon them. I believe that crisis is.

And so for a period of time, we're going to have to explain to members of Congress that crisis is here. It's a lot less painful to act now than if we wait.

Q Can I ask a follow up?

THE PRESIDENT: No. (Laughter.) Otherwise, it will make everybody else jealous, and I don't want that to happen.

Angle.

Q Thank you, sir. Mr. President, on that point, there is already a lot of opposition to the idea of personal accounts, some of it fairly entrenched among the Democrats. I wonder what your strategy is to try to convince them to your view? And, specifically, they say that personal accounts would destroy Social Security. You argue that it would help save the system. Can you explain how?

THE PRESIDENT: I will try to explain how without negotiating with myself. It's a very tricky way to get me to play my cards. I understand that. I think what you -- people ought to do is to go look at the Moynihan Commission report. The other day, in the discussions at the Economic Summit, we discussed the role of a personal account. In other words, what -- how a personal account would work. And that is, the people could set aside a negotiated amount of their own money in an account that would be managed by that person, but under serious guidelines. As I said, you can't use the money to go to the lottery, or take it to the track. There would be -- it's like the -- some of the guidelines that some of the thrift savings plans right here in the federal government.

And the younger worker would gain a rate of return, which would be more substantial than the rate of return of the money now being earned in the Social Security trust. And over time, that rate of return would enable that person to be -- have an account that would make up for the deficiencies in the current system. In other words, the current system can't sustain that which has been promised to the workers. That's what's important for people to understand. And the higher rate of return on the negotiated amount of money set aside would enable that worker to more likely get that which was promised.

Now, the benefits, as far as I'm concerned, of the personal savings account, is, one, it encourages an ownership society. One of the philosophies of this government is if you own something, it is -- it makes the country a better -- if more people own something, the country is better off; you have a stake in the future of the country if you own something. Secondly, it's capital available for -- when people save, it provides capital for entrepreneurial growth and entrepreneurial expansion, which is positive. In other words, it enhances savings. And, thirdly, it means that people can take their own assets, their own retirement assets, and pass them on, if they so choose, to their family members, for example. That's positive. That's a step.

The Social Security system was designed in a, obviously, in an era that is long gone, and it has worked in many ways. It's now in a precarious position. And the question is whether or not our society has got the will necessary to adjust from a defined benefit plan to a defined contribution plan. And I believe the will will be there. But I'm under no illusions. It's going to take hard work. It's going to take hard work to convince a lot of people -- some of whom would rather not deal with the issue. Why deal with the issue unless there is a crisis? And some of whom have got preconceived notions about the benefits of what may be possible.